adminWalter Muchinguri in Victoria Falls
SHORT term insurers have been warned against engaging in unethical practices that could reverse the gains that have been made by the industry to date. Mr Pupurai Togarepi from the Insurance and Pensions Commission told delegates attending the Insurance Institute of Zimbabwe’s annual conference that is underway in Victoria Falls that the Commission was concerned about the situation where some short term insurers were now specializing in third party insurance at the expense of comprehensive insurance.
“Some insurance companies are selling third party insurance to clients without clearly advising them on what the insurance cover entails and this is creating problems when it comes to claims.
“In most cases we have had to explain to the client about the cover they bought. We want insurers to go back to basics and to be ethical in their conduct,” he said.
Third party insurance is a motor vehicle cover that is purchased for protection against the actions of another party.
Third-party insurance is purchased by the insured (first party) from an insurance company (second party) for protection against another party’s claims (third party).
He added that the practice has also resulted in the escalation of undercutting on pricing where there are various prices for the same product.
“We have heard of various figures from US$25, US$30 and US$35 for third party insurance. Most people would buy this cover because it is cheap without looking at the implications. We all want to get premiums but are we doing the right thing?”
“What then is the appropriate price that will allow you to offer adequate cover?” he asked.
Apart from undercutting on rates Mr Togarepi said they were also concerned about the aggressive vending activities by agents representing some insurance companies that operate from mostly at post offices and other outlets that sell motor vehicle licences.
“These agents are selling both fake and genuine cover notes, which is very worrying as it is disadvantaging clients,” he said.
Mr Togarepi said such practices were dangerous as they had the potential to erode efforts that have been made to reverse the negative perception about the insurance industry.
Meanwhile the Kenyan College of Insurance chief executive Mr Ben Kajwang said prospects for the growth of the insurance company in Africa and Zimbabwe were “very bright” given the exponential growth that has been forecast in Africa within the next few years.
He however said the insurance companies should seek to come up with the right products that speak to the demands of clients.
“The scope for new insurance products is unlimited but insurance companies just need to come up with the right packages that are suited to their target group.
“In Kenya we have the Masai who own a lot of cattle but there are no insurance products suited for them because the available cattle insurance products are either in English or Swahili. Why not come up with insurance covers written in their languages and in a manner that the Massai will understand.
The trick is in coming up with simple products that are understood by your target market,” he said.
Mr Kajwang who presented a paper on re-engineering the insurance value chain for the development of the insurance industry added that for insurance companies to take advantage of these opportunities there was need to strengthen skills training by supporting training institutions to ensure that they craft the right curriculum that will allow them to impart the right skills to insurance practitioners..
Online Reporter